Australia raises interest rates to 4.25%
The Reserve Bank of Australia (RBA) has today elected to lift interest rates from 4% to 4.25%.
Australia was the first economy to raise rates from a 50-year low as the economic downturn eased. Other major economies opted for lower interest rates to boost their economies.
Furthermore, it is one of the few developed economies not to have fallen into recession like its counterparts throughout the world.
The economy only contracted in the final three months of 2008. The definition of recession is two consecutive quarters of negative growth.
The Australian economy has benefited from an increase in commodity prices, while exports have received a boost due to demand from China for its iron ore and other raw materials.
Meanwhile, returning to today’s decision, it is the fifth rate rise since October, and the bank has hinted there are further hikes in the pipeline.
RBA’s Governor, Glen Stevens, said: “With growth likely to be around trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average.”
Australia’s official rate of inflation was at 2.1% for the last three months of 2009 – within the bank’s target of between 2% and 3%.